Shares of Palo Alto Networks, Inc. (NASDAQ:PANW) are falling Wednesday after the Chinese government warned domestic companies not to use its services, citing national security concerns.
Palo Alto Software Banned In China
According to Reuters, China has banned the usage of technology from around a dozen cybersecurity firms based in the U.S. and Israel. Palo Alto Networks, which produces software that protects network and cloud security, is among the companies named.
The article says the directive was issued in recent days, and that the government was concerned that these companies’ software could store and send confidential information abroad.
Palo Alto Networks is headquartered in Santa Clara, California, but its founder, Nir Zuk, was born in Israel. The company has a significant presence in the country, including several acquisitions of other cybersecurity companies. The report indicates that China is specifically targeting U.S. and Israeli cybersecurity software.
Analyst Consensus & Recent Actions
Palo Alto stock has an average price target of $229.64. Recent analyst moves include:
- UBS: Neutral (Lowered Target to $215.00)
- Piper Sandler: Overweight (Raised Target to $265.00)
- Guggenheim: Upgraded to Neutral
Benzinga Edge Rankings
Below is the Benzinga Edge scorecard for Palo Alto, highlighting its strengths and weaknesses compared to the broader market:
- Momentum: (Score: 43.57/100) — Stock is underperforming the broader market.
- Value: (Score: 5.12/100) — Trading at a steep premium relative to peers.
- Growth: (Score: 98.21/100) — High growth potential indicated.
The Verdict: Palo Alto’s Benzinga Edge signal reveals a mixed outlook. While the strong growth score indicates potential, the low value score suggests that investors should be cautious given the premium valuation.
Top ETF Exposure
First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR): 7.80% Weight
iShares Expanded Tech-Software Sector ETF (BATS:IGV): 4.12% Weight
Amplify Cybersecurity ETF (NYSE:HACK): 5.62% Weight
Significance: Because PANW carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
PANW Shares Slide
PANW Price Action: Palo Alto Networks shares were down 0.95% at $189.03 at the time of publication on Wednesday, according to Benzinga Pro data.
Image: Shutterstock
